Aerwyna and Ezra entered Reitz's study, the guards and knights that were escorting Ezra were left outside. Reitz wore a frown as he sat behind his desk, he didn't answer Ezra before because he didn't want the public to know the actual state of the treasury. Aerwyna couldn't help but giggle.
"Hey, that's unfair, it's not funny you know? You basically blackmailed me, Ezra," Reitz sighed. At this remark, Aerwyna burst out shrill laughter.
"Haha, our son outsmarted you. You know you should curb that impulsiveness of yours, haha," Aerywna chuckled merrily.
"What's this about? Are you just trying to get me to fund your projects again?" Reitz looked at his son grimacing.
"Of course not dad, this will really make Castle Blackfyre a lot of money. I promise. " Ezra replied, although he could not hide his sly smile.
"Then why does it sound like you are scamming me? I gave you my word in front of all those people, they would not look kindly at me if I took it back, my authority would not hold any weight if I did," Reitz explained while still frowning. "You know this and used it to your advantage." He groaned.
Then as the thought passed he spoke again. "At least I know you can handle yourself in court," Reitz frown disappeared and chuckled a bit.
Reitz clapped on to his knee again, "Well, let's hear this great business plan of yours. I led you here partially because I wanted to hear your proposal without other people. Word could spread and they would copy your idea."
Ezra nodded in agreement.
"Father I'm going to establish a business, it's actually not very easy to copy. It requires that one would have the power of at least an Earl to execute so don't worry about imitators any time soon."
Reitz's ears perked up. He wanted to hear it out, if Ezra said was true then, the monopoly alone would make it very profitable.
"Father, the business is what I call a bank. There will be three important things that this institution will be doing. First and foremost is lending money to merchants and charging them for that service in the future," Ezra said. While he wanted to extend the services to common people, he knew that it was too early to do this in the inception of the idea. He wanted to help the lower classes, not rob them blind.
Besides if done incorrectly a sudden tilt in the economics of Rex Imperia would spiral everyone into poverty so he had to be really careful when implementing the banking system. He remembered a passage on earth: "Give a man a gun and he can rob a bank, give a man a bank and he can rob the world." Yes, banking services were like tools if used for the right purpose it would help the users, if not then it would hurt them instead.
Reitz's eyebrow raised. "Continue."
"I have made a few different models so that we can make a profit out of this. First is to write a contract where they borrow a principal amount and pay us for an exact percentage. So it would be a fixed time and a fixed value. For example, we lend a merchant, 100 gold imperials, after half a year he would pay us a total of 110 gold imperials."
Reitz face lit up, it was ingenious, and it was literally making money out of money. There were no messy trades and there was no travelling. It was a brilliant concept. "But what if the merchant can't pay on time?"
"Well, we can choose from many options depending on the merchant. One, we could simply confiscate his goods or property and sell it. Two he could re-apply for another loan, called a rollover, and we charge a percentage on top of that but we have to screen it if his business is really practical and it can actually pay us by that time we could also charge a fine for delayed payment on top of the percentage of the money we are charging. Three, we could opt for the debtor for slavery but I don't want precedence in the matter, eventually, we will be copied by others."
Reitz nodded.
"We can also let merchants loan a principal amount and let them pay a fixed amount per month plus a fee that way, at least the money would not be stagnant and would keep on flowing back to us"
"Yes, I think I like that set up more,"
"Finally we can have them opt for a small percentage that compounds over time, this last one is the most lucrative trust me. In the future, these merchants would not want to use their own money as start-up capital and would look to us for money."
Wow you have thought this through haven't you Ez? Hmm, what is the second way we can make money?"
"The second way we make money is by providing a safe haven for their money,"
"What do you mean?"
"Around Fulmen we will establish other banks, especially in city centres. Merchants will let our bank handle their money and give it to us willingly."
"What? I don't follow?" Reitz was confused.
Ezra smiled. "Dad they will give us the money and then they will receive what I'll call a certificate of deposit. This paper will hold information on how much they have deposited. Then they can exchange this paper with actual gold in other cities or towns if we have branches there. "
Ezra then was walking to and fro like a university professor explaining a subject to his students. He continued. "We will charge a two percent fee when they get withdraw their money. With this set up they won't need to actually bring their money along with them while travelling making the journey safer. The risk of getting pillaged by their own hired hands will go down significantly and also bandits are less likely to attack a caravan without money too. So a lot of merchants will definitely use the service."
"What only two percent? That's too low isn't it?" Aerwyna interjected and she was frowning.
"Mother you didn't let me finish. The certificate of deposit is also a contract in itself. It will state there that we can use their money for our own purposes and investments but they can get the full sum whenever they want. The key is letting them keep on depositing their own money with our bank. Since they know it is safe with us they won't easily withdraw the money." Ezra explained and smiled.
On earth, he would have been heralded as the most diabolical banker of all time. Instead of paying the depositor interest for letting them use their money, the depositors were actually going to pay money to Ezra's bank instead, money that he could use for lending, money he could use for making even more money.
In the future he planned to convert it so that depositors will get an interest if they transact with him, but for the meantime he did not want to implement it, it wouldn't make sense that a business would be giving away money, this would be treated with suspicion as banking was not even in its infancy in this world. This would cause a lot of problems.
This very first bank he was establishing would be the blueprint of all banks and he would make it into a central bank in the future to regulate banking interest, the discount rate, and inflation and the future money markets as a whole. This alone was a tremendous power to wield. In the future, his bank would be able to make and break kingdoms and level the lords into submission but that would also require sufficient firepower to back this.
Aerwyna was still frowning. "Ezra that's too lax, after all the staff and the soldiers we hire to implement this will be counted as expenses."
"Just trust me mother, with the money we are going to get from this, I think we would rival the wealth of the whole empire itself. With just two per cent, any traveller can safely deposit his money without fear of being robbed. But we have to make certain that the people who have deposited are the actual people who are withdrawing."
Aerwyna didn't like the answer but she still nodded in agreement. "Okay Ezra, I trust your judgement."
"The third way we can make money is to sell the goods we have confiscated, with our network we can easily find buyers who want the confiscated goods and we could even profit more from defaulting merchants. Yes, and there is even a fourth way."
"Really now? How?"
"We can set up places where their certificate of deposit can be used as currency and trade supplies and goods for it."
"Damn, it's really well thought of." Reitz looked at him." I thought at first that you were moping and wanted to take revenge on me, haha." Reitz laughed." This is truly a huge undertaking. You are a monster you know, how do you come up with these ideas of yours? Hahaha, I think you get your intellect from the Blackfyre linage,"
"Don't bet on it," Aerwyna retorted.
"As for the things I need father I need manpower, I need a few scribes and treasurers. I need people to be able to crunch numbers. I need a list of known trade routes, I think we should set up shop on the main trade routes. Please help me with organizing the people, dad, I need you to understand how this bank works so that you and mother can give me input."
"Of course my son, I now see why you required the money," Reitz nodded. "Very well then, this is, not just Ezra's business anymore it is now a family undertaking!"
Ezra smiled again.
"Since you like it so much, we can use the whole of the treasury for this right?"
Reitz almost fainted on the spot flabbergasted as he fell off his chair.
We ended last week within the top 14,
Thanks!
Since the bank was Ezra's idea he was tasked with organizing the business. Reitz, on the other hand, oversaw the logistics while Aerwyna oversaw the design of the building in the market district, they decided to use a building with three floors, it was not a towering building but it was moderate.
In front of the arched entrance was a modified version of the Blackfyre coat of arms. The walls outside the edifice were studded with light crystals. The gateway was glazed with gold. Reitz wanted to commission a statue for the entrance but it was too time-consuming, so he decided that the statues would be placed the next year.
Aerwyna was fond of luxury and she had an eye for design, she knew that a luxurious reception was optimal since the merchants would not trust an institution that could not offer extravagant comforts. It was decided that the seats would be lined with velvet and as for the chairs they would be lined with gold. The floor was going to be a marble that was exported from Fulmen. The overall finish should have an air of regality.
Reitz made it sure that the refurbishing would cause a commotion, they only brought the grand embellishments in during times with most merchants and people. Ezra thought that this was shrewd since everyone would be curious on what type of establishment was actually being constructed.
Word spread on the streets that it was some sort of luxury store or a store which would cater only to well-known merchants, and it would only showcase goods that were rare in the empire. Reitz also stationed knights to guard the establishment to add to the flair.
Ezra was impressed by his father's wittiness, he knew how to market to people. Aerwyna had her handmaidens pick the finest silk for the curtains and she also had them look at the desks. Ezra let them design the building totally because he knew that if he were to design one, it would look like a bank in the modern setting with bank tellers behind the glass.
Ezra conversed with his mother inside the building while the refurbishing was taking place.
"Mother, we need people who will handle the merchants. We will call these personnel bank tellers, they will be the ones who face them," Ezra explained.
"Yes, Ez, I plan to select some handmaidens to handle it. There will also be some people who serve wine and cheese to the merchants who are applying for a loan. What do you think?"
"That's a brilliant idea mom." Ezra was excited. 'Yes nothing like an intoxicated businessman in a bank,' he thought.
"How about the scribes and treasurers? I need to train them," Ezra continued, with the banking system in place he was thinking of introducing modern accounting techniques and bookkeeping so that he could easily track and follow the books.
He also wanted to teach his parents so that they could look into it as well and they would better govern and use it for checking the finances of Castle Blackfyre. He already structured a plan to implement some technologies that were already being used on Earth, the bureaucratic nature of banks and the swiftness of implementation needed to be in a delicate balance.
Ezra was happy with the input of his parents, there were some insights that they gave him that he would not have thought of because he was accustomed to banking on Earth, it proved that Reitz and Aerwyna were both very capable leaders themselves.
"The scribes will be ready by the end of the week," Aerwyna replied. "You wanted fresh trainees right?"
"Yes, the younger the better, I think they are easily trained mom."
"You know it's really strange when you talk like that, you sound like an old noble who has been administering his domain for some time," Aerwyna chuckled.
"Well mom, you know that I am quite different from other children right?"
"I guess, haha."
Ezra walked around the building and inspected the office space. The rooms were plainer than the reception area, the offices had desks like he asked Reitz but his father didn't bother to overly decorate the offices.
The meeting hall a 15 seater table like he asked and it was lit with 3 pairs of magic crystals. There was a blackboard made of polished slate as well so that the people in charge of the meeting could write down their thoughts for the others to visualize. Ezra mandated the creation of a few notebooks. At first, Reitz was confused why Ezra wanted blank books. Ezra then explained the use of the notebooks and he nodded in satisfaction.
Ezra also proposed the metal-nibbed pens instead of quills which he asked the blacksmiths to manufacture. These pens were supposed to be given to the future directors of the bank.
Ezra walked to the vault where the money was supposed to be kept, the walls were 2 meters thick and it had a steel door. It was not a place where you could break with brute force. Overall Ezra was satisfied with the building. Reitz had a knack for budgeting, and out of the 150 000 gold. Only 2000 had been spent. For the added staff and personnel another 500 gold per month was the estimated expenses.
Ezra had the drafts for the contracts prepared already. He was going to offer three payment schemes to the merchants. Which he had discussed with his father prior to the construction of the bank. Ezra also studied the trade routes and he discovered that the border City of Aprax was the final destination of the merchants in Fulmen, he already arranged plans for the institution.
If he wanted to monetize the deposits, he needed to establish a bank in the Fortress, but this was very risky as this was a border of the empire, it was susceptible to attacks of Arcanists. To establish a bank there would mean going there personally and looking at the situation. If he could successfully make a bank there then it would be a window to more monetization options.
This was left for the future, in the meantime, the priority was lending to established merchants. If he couldn't make money with the loans then it would be a longshot for a bank to be established in Aprax.
Reitz entered the building.
"Lord Father," Ezra greeted.
"Ezra," nodded Reitz. "The bank will be ready in a fortnight, I plan to spread rumours of the actual business next week but we still haven't named the bank yet. What do you propose?"
"Lehman Brothers. JP Morgan and Chase. Wells Fargo. The Federal Reserve Bank. " Ezra blurted out.
"What?"
"Nothing Father, It was just a random thought."
"Oh, Seriously then what will we name it?"
Ezra thought for a bit and looked up. "Let's name it the Imperial Bank of Blackfyre."
Reitz smiled," Yes I like that very much."
2nd chapter this week, I hope I have the time to make more this week.
You may also Like
Paragraph comment
Paragraph comment feature is now on the Web! Move mouse over any paragraph and click the icon to add your comment.
Also, you can always turn it off/on in Settings.
GOT IT